How to Define Cuba’s Private Sector

The Cuban private sector currently includes three primary components that are authorized by the Cuban government: (1) self-employed entrepreneurs known as cuentapropistas, (2) agricultural cooperatives and private farmers, and (3) nonagricultural cooperatives.

Cuentapropistas: Cuba has authorized 201 categories of legal self-employment for individuals. However, many of these categories are highly specific (e.g., “Flower Wreath Arranger” and “Children’s Ride Operator”), and most white collar professions, such as engineers or lawyers, are not among the authorized categories. There were approximately half a million licensed cuentapropistas at the end of 2015, according to Cuban government data. According to one analysis, about 80% of licensed cuentapropistas operate their own businesses, while the remaining 20% are contract workers for other cuentapropistas. Common cuentapropista activities include restaurants, bed and breakfasts, transportation, and construction. Certain forms of self-employment have been authorized in Cuba since 1993; however, the Cuban government has increased the number of authorized categories in recent years. For example, in 2013, the Cuban government increased the number of authorized categories from 181 to the current 201.

Rox Jewelry – Havana. Image by Cuba Journal

Agricultural cooperatives and private farmers: There were approximately 5,200 agricultural cooperatives operating as of the end of 2015, according to the Cuban government. There are three types of agricultural cooperatives in Cuba. All three types of cooperatives are considered part of the private sector; however, their ownership structure and relationship to the state differ.

• Credit and Services Cooperatives (Cooperativas de Créditos y Servicios): These cooperatives, first formed shortly after the Castro regime came to power, provide credit and other services to the cooperative members and are comprised of independent farmers who individually own and farm their land.

Cohiba tobacco is loaded for processing. Image by Cuba Journal

• Agricultural Production Cooperatives (Cooperativas de Producción Agropecuaria): First formed in the 1970s, these cooperatives involve the nonreversible sale of land and equipment by private farmers to the cooperative in exchange for a membership/ownership stake in the cooperative.

• Basic Units of Cooperative Production (Unidades Básicas de Producción Cooperativa): First formed in the 1990s, these cooperatives were formed from farms previously run by the state. Under this cooperative arrangement, the state owns the land; however, the farmers lease the land from the state, and the cooperative members control production on the farms. There are also some independent private farmers in Cuba who are not associated with a cooperative. According to Cuban government data, the amount of agricultural land held by agricultural cooperatives and private farmers was 70% in 2015.

Image by Cuba Journal

Nonagricultural cooperatives: First approved in 2013, 367 non-agricultural cooperatives were operating as of the end of 2015. Some non-agricultural cooperatives are “self-initiated” while others were formed as a result of the Cuban government’s decision to privatize state companies. According to one analysis, approximately 75% of non-agricultural cooperatives are former state-owned enterprises. Unlike with cuentapropistas, there is no list of permitted occupations for non-agricultural cooperatives. To date, the majority of non-agricultural cooperatives are involved in service, rather than production activities. The Cuban government has approved non-agricultural cooperatives in construction, transportation, financial services, and automotive repair, among other areas.

Joint Ventures

Cuba experts and analyses of the Cuban private sector differed as to whether joint ventures, which are partnerships between foreign companies and state enterprises in Cuba, should be considered part of the private sector. According to Cuban sources, joint ventures in Cuba operate in a limited number of sectors such as hotels, tourism, and mining. Some analyses included joint ventures as part of the private sector; however, some and experts believe that joint ventures should not be considered part of the private sector given the nature of joint venture arrangements in Cuba.

Joint ventures are generally required to be majority owned by Cuban state-owned enterprises. In addition, foreign firms that enter into joint ventures in Cuba cannot directly hire Cuban workers and must instead go through a Cuban government staffing agency. These staffing agencies generally take a significant portion of the salary that the foreign firm pays to the workers.

How to Define Cuba’s Private Sector was last modified: January 23rd, 2017 by Cuba Journal